Coalition Senators' Minority Report
Introduction and Summary of Position
The Fair Work
Amendment (State Referrals and other Measures) Bill 2009 (“the Bill”)
continues the process of seeking to achieve and create a national system of
workplace relations, originally commenced by the Howard Coalition Government in
2006.
The Australian Labor
Party subsequently adopted this same aim, which it enunciated during the 2007
election campaign.
The advantages of
having a national workplace relations system are widely known. The benefits to
workplaces, particularly those that operate across State borders, are
considerable and there are economic advantages for the public in general. A
national system provides consistency of law and the application of that law,
minimising the ability for the States to create conditions that vary from each
other thereby providing certainty.
The Coalition maintains
the view that Australia deserves a national system of workplace relations and
to that end the Coalition is broadly supportive of the outcome this Bill seeks
to achieve.
Coalition senators do,
however, hold several reservations about the way in which the Bill seeks to
achieve this aim. In particular, we are concerned, that in achieving a national
system, the power to control and determine that system and its operation has
effectively been handed to the State Governments which choose to refer their
existing powers.
No consultation
The Government has made
much of the consultative processes that it has followed when developing and
introducing its Fair Work system. This approach is commendable and has utilised
a number of processes, including the Committee on Industrial Legislation
(“COIL”).
Coalition senators do
note, however, that in relation to this Bill there has been no such
consultation. Witnesses appearing before the Committee gave evidence that the
first time they saw the Bill was after its introduction into Parliament[1]. There
appears to have been no subsequent formal consultation between stakeholders
(including the Opposition) and the Government in relation to the content and
effect of this Bill.
This has created
significant difficulties for stakeholders given the tight time frames that have
existed to consider the effect of, and provide views on, this Bill.
We note that the
Government has seen fit to implement a timetable which accommodated
consultation through COIL for every other Bill by which the Government proposed
general amendments to the federal workplace relations legislation. The
rationale for the absence of consultation on this Bill is unclear to Coalition
senators. We hope that it is not a sign of things to come for future
legislative developments within the national workplace system.
In addition, some
witnesses were concerned that this Bill be read in the context of the
Inter-Government Agreement (“IGA”) developed between the States,
Territories and the Commonwealth. While a confidential copy of the IGA was
provided to members of the Committee, it was not available to the public on 11th
November 2009 (or before) and therefore many witnesses appearing before the
Committee were missing a crucial element that would enable an appropriate
assessment of the effect of this Bill. Witnesses observed that, because of
this, they were effectively in the dark about the entire package of referral arrangements
proposed by the Bill and the IGA.
Reference system
A reference by a State
operates on the basis that industrial relations powers they currently hold will
be referred, with respect to particular defined subject areas, to the
Commonwealth. As it currently stands, powers held by the States relate only to
those workplaces which are not covered by the existing Fair Work laws; being
those non-incorporated trading entities such as sole traders, family trusts etc.
This includes many small businesses.
This reference is also
subject to certain exclusions, such as powers in respect to the State public
service and areas of local government. These will remain within the domain of
the powers retained by the States.
There are three
categories of reference within the Bill, these being an “initial”
reference, an “amendment” reference and a “transition” reference.
The “initial”
reference is, effectively, the basic reference of State power to the
Commonwealth in the first instance. This occurs via the creation of a new
Division 2B at part 1-3 of the Act, which extends the definition of national
system employer and national system employee to include those
previously not subject to the coverage of the Commonwealth laws.
The “amendment”
reference provides for the Commonwealth to amend laws with respect to the
subject matters so referred by the States in their “initial” reference. This
means that the Commonwealth will be able to amend the federal laws, with
uniform application to all employers and employees in each referring state.
The “transition”
reference is necessary as it allows for the Commonwealth to transition existing
non-national system employers into the national system. This is detailed at
schedule 2 of the Bill.
Coalition senators are
unconcerned with the “initial” and “transition” reference concepts. We
understand that these are necessary to bring the States into a national system.
These references are, in simple terms, unconditional in that once a State has
referred its powers they become the domain of the Commonwealth. Within the
context of the Bill, they are references that are “one-off” in nature.
The “amendment”
reference concept is similarly a necessary aspect to facilitate a national
system. Taken at face value, Coalition senators accept the conceptual basis for
this reference type and its probable necessity. However, concerns arise about
this concept when considered in the context of complicated and various
mechanisms proposed in the Bill for a State or States seeking to terminate initial,
amendment and/or transitional references.
Termination of an Amendment Reference
Coalition senators are
gravely concerned in the way that this Bill, taken together with the IGA, in
essence, hands control of the Commonwealth laws and system to the States, in
exchange for (and as the price of) referral of powers to the Commonwealth.
This is manifested in various
mechanisms; some contained in this Bill and some arising from the
Inter-government Agreement (“IGA”).
We understand the
proposed arrangements to be as follows:
-
A
state wishing to amend or terminate its referral of powers to the Commonwealth,
will give the Commonwealth not less than 6 months written notice (IGA Item
2.5). In this event, that state ceases to be a 'referring state".
-
Should
all States wish to terminate their amendment reference of their powers, they
can do so by proclamation of the State Governors with six months’ notice, if
the amendment references of the other States all terminate at the same time.
In so doing, they do not cease to be 'referring states";
-
An
individual State can terminate their amendment reference by proclamation of the
individual State Governor with three months’ notice, if the said State Governor
considers that an amendment to the Fair Work Act is inconsistent with the “fundamental
workplace relations principles”. In that event, that state does not cease
to be a 'referring state'; and
-
A
future amendment to the Fair Work Act 2009 will not proceed unless it is
endorsed by a two-thirds majority of the referring State and Territory
Governments (IGA Item 2.18).
Item 1 above
We note that Item 1
above does not appear to be replicated in the Bill.
Items 2 and 3
above
The amendment reference
termination mechanisms referred to in items 2 and 3 above are additional and
different from other termination mechanisms contemplated by the Bill for
initial, amendment and transition references. They introduce uncertainty and
complexity. The Committee was not provided with clear evidence as to either the
purpose or effect of the Bill's express provision that a state or states
terminating amendment references in either of these two specific ways, did not
(in so doing) forgo their status as a 'referring' state. Coalition Senators
are concerned that there may be undesirable consequences of states terminating
amendment references yet remaining 'referring' states, including:
-
Those
states are intended to retain powers under the IGA (eg to vote to veto future
federal workplace relations amendments no longer covered by the package of
federal laws)
-
Much
of the system of workplace laws covering non-constitutional corporations and
their employees will continue to be administered and resourced by the
Commonwealth (even though those laws will have fallen out of kilter with the
then operative federal laws.)
Item 2 above
In respect of item 2
above, the Department provided evidence to the Committee that 'the six month
provision is the standard provision that exists in Commonwealth referral
schemes'[2].
However, it is unclear whether it is the six-month aspect alone
in this provision, which is 'standard', and whether it is so provided in other
Commonwealth referral legislation. We also note that subsection 30B(6) of the
Fair Work Act envisages that a termination of reference is total in nature,
representing a complete withdrawal for a referring State and does not stipulate
any required time frames for such withdrawal.
Item 3 above
In the view of
Coalition senators, Item 3 proposes a number of difficulties.
Firstly, the terms of
the “fundamental workplace relations principles” are particularly unclear. This
lack of clarity arises from the broad nature of those principles and the
potential for them to be interpreted to mean virtually anything.
Evidence before the
Committee confirmed this lack of clarity with even the Department being unable
to provide a definitive answer to questions about this issue. However, the
Department did concede that an alteration to an associated Regulation or the
terms of a Code (eg the Small Business Fair Dismissal Code) could result in the
circumstances in item 3 becoming enlivened.
In short, virtually any
endeavour to amend the Fair Work laws could be interpreted by any one State as
offending the fundamental principles.
Secondly, there is only
a requirement that a particular State Governor (presumably, but not
necessarily, in accordance with the wishes of the relevant state Government)
“considers” that an amendment offends the principles. There is no requirement,
for example, for the State Governor to be satisfied on reasonable grounds
that an amendment offends the fundamental principles. This provision, in
effect, gives the State Governors an ability to terminate an amendment
reference at a whim in virtually any circumstance.
It makes a nonsense of
any notion that if a state activates this termination mechanism, then the
Commonwealth, in amending federal laws, must have breached a 'fundamental
principle'. In fact, it makes a nonsense of a state having to be seen to
justify, or proffer any reason, for termination of an amendment reference.
Thirdly, termination of
an amendment reference will return workplace relations to a situation where
different laws would apply to different States and, in addition, different laws
within a particular State. As the submission of ACCI observes:
If
the termination of an amendment reference is ever invoked by a State
Government, this will cause confusion and unnecessary dislocation for referral
employers, as non-referred employers continue to be bound by the fair work
laws, but their referral counterparts do not. It also appears to indicate that
State Governments are not fully committed to achieving a national system for
the private sector.[3]
Coalition senators
agree with the concerns outlined by ACCI.
Fourthly, the provision
allows the termination of reference ability to become a political tool for the
States to control the future of the Commonwealth workplace system. Again, ACCI
observes:
It
would be unfortunate if it was ever used by States as a tool to extract
concessions from the Commonwealth in modifying or refusing to modify the fair
work laws in the future. And with a confidentiality clause in an IGA, we may
all be none the wiser. Whilst it appears Victoria has introduced amendment legislation
which would align their referral to these provisions, Victoria has not had such
provisions since 1997 and this has not caused any problems to date. Whilst such
action would not be supported by employers, a State which is truly concerned
with future amendments to the fair work laws should withdraw from the system in
toto, rather than cherry pick which parts it does or does not like.[4]
This observation from
ACCI also raises a fifth concern, being the ability for the States to “cherry
pick” the parts of the Fair Work laws that it may agree with at a particular
point in time. Coalition senators postulate this scenario, using the national
employment standards:
-
South Australia
and Queensland refer their remaining power to the Commonwealth in
accordance with the terms of the Bill as proposed;
-
The Commonwealth
determines that it would like to increase the NES for Annual leave from 4
weeks to 6 weeks;
-
South Australia
agrees with this amendment and chooses to not terminate its amendment
reference;
-
Queensland does
not agree with the amendment and terminates its amendment reference;
-
6 weeks annual
leave becomes the NES for both the Commonwealth and South Australia.
The effect of the above
example becomes:
| NES |
Commonwealth |
SA |
QLD |
| Annual Leave: |
6
weeks |
6 weeks |
4 weeks |
The above confusion is
exacerbated by the fact that the different NES conditions would also be
different for employers within both South Australia and Queensland
dependent upon whether or not they are considered to be national system employers
(NSE) under the provisions of the Fair Work Act as it currently stands.
| NES |
Commonwealth |
SA |
QLD |
| Annual Leave: |
6
weeks |
6 weeks |
4 weeks
(6
weeks for NSE) |
The above example,
entirely possible under the provisions of the Bill as currently drafted,
represents a situation that would create chaos and uncertainty within States
and between States.
A simpler approach
A much simpler approach
would be for the Bill to simply provide the States an ability to terminate
their amendment reference at any time and for any reason, subject
to the provision of an appropriate notice period. This dispenses with the
complexity and confusion created by the Bill's array of termination mechanisms,
and replicates the substance of existing provisions in the Fair Work Act.
Such an approach would
provide certainty to the States about the future of the Commonwealth system,
while concurrently encouraging them to refer State powers in the first
instance. Significantly, it would not allow the States to “pick and choose”
which refinements of the national scheme they will accept, thus avoiding the
“checkerboard” effect of industrial laws which could result from the Rudd
Government’s approach.
The supposed
“rationale” intimated to the Committee would be also be satisfied, in a manner
that removes any pretence that a terminating state will do so under the guise
of a legislated justification for so doing.
It substantially
simplifies the Bill, both in its terms and effect. In addition, it would assist
the Commonwealth to amend the Fair Work laws efficiently and effectively, in
the event that circumstances warrant change.
Item 4 above
Item 4
above also creates unnecessary uncertainty for workplaces and fundamentally
undermines the role of both the Commonwealth and the continued evolution of a
national workplace system.
AiG's evidence
presented to the Committee established that, subsequent to the introduction of
the Workplace Relations Act 1996, there were many subsequent changes to the
laws, the requirement for which were unforseen[5].
Should a similar circumstance arise in the future as it relates to the Fair
Work laws, there would be a requirement for the States to be consulted and
their approval gained, prior to the proposal or amendment being moved. This
would create an unnecessary delay which would likely operate to the detriment
of workplaces that require such an amendment or proposal.[6]
In a worst case
scenario, the IGA seems to contemplate that referring States would have the
ability to veto the proposal or amendment, undermining the role of the
Commonwealth Parliament and the fundamental nature of a federal system of
workplace laws.
Providing the States
with the power to control the future evolution of the national Fair Work system
is inherently dangerous. Not only is the role and purpose of the Commonwealth
Parliament undermined, it provides control to jurisdictions who, in some
circumstances, have to date created State industrial relations systems that
are, at best, unworkable and, at worst, oppressive. Nowhere is this more
apparent than in New South Wales, where the industrial relations system has
acted as a disincentive to investment, employment and economic growth. A
commonly held view is that the NSW system of industrial relations, its tribunal
and its safety laws are the “ball and chain” of the NSW economy, and have
directly and significantly contributed to the perilous economic position in
which it now finds itself. Allowing a State government, with a record like that
of New South Wales, to control national workplace laws would be a national
disaster for Australia’s future prosperity, economic growth and infrastructure
development.
During committee
proceedings it was suggested that the rationale for the “amendment referral
termination” provisions comes from an attempt to achieve two outcomes for
referring States. Firstly, the provisions provide encouragement for the States
to refer their powers and, secondly, to provide the States with certainty about
the potential for any future “mischief” that might occur to the Commonwealth
laws and the effect upon them in that circumstance.[7]
While this might
superficially appear to be a logical rationale, it raises the sobering spectre
that the State Governments (even those who have signed the IGA) are not
genuinely committed to achieving a nationally consistent set of workplace
laws. Additionally, as noted above, it gives the States the ability to make
workplace laws a political tool and encourages threats to block any amendment
reference.
To this end, Coalition
senators are concerned that the referral 'package' of the IGA and the Bill
create new uncertainties and substantially reduces the role of the Commonwealth
in shaping a workplace system over which it has primary responsibility. It is
cold comfort that this aspect of the IGA is not proposed to be legislated in
the Bill.
Problems with Fair Work Act 2009
Coalition senators note
that there remains, in our view, a significant number of problems with the
implementation of the Fair Work Act thus far.
Primarily, the so-called
“award modernisation” process currently being dealt with by the Australian
Industrial Relations Commission is increasingly viewed by many varying
stakeholders as, at best, problematic and, at worst, bordering on farcical. The
Minister for Employment and Workplace Relations has had cause, on many
occasions, to intervene in this process. In the view of Coalition senators, the
process has not met the expectations so vehemently promised by the Minister nor
have the intentions, objects or stated aims of this process been satisfied.
That the so-called
modern award system is due to commence on 1 January 2010 is of significant
concern to Coalition senators, particularly given that the award modernisation
process is not completed and will not be until at least December 2009. We
believe that workplaces will simply not have the time they both need and
deserve to appropriately understand and implement the changes required to
accommodate the terms of modern awards.
The above observation
is especially acute for those in the small business sector. In the context of
this Bill, many of the workplaces that will become subject to the Fair Work
Act 2009 are likely to be small businesses, such as sole traders and
related entities not previously captured by the Corporations powers.
A question that looms
large in the mind of Coalition senators goes to whether or not it is
appropriate for a large number of small private sector businesses, currently
outside of the Commonwealth laws, to become subject to those Commonwealth laws
and the associated system that has so far failed to meet its stated aims or
live up to the rhetoric associated with its introduction.
As stated earlier,
Coalition senators believe that Australia deserves a national workplace
relations system. However, it is reasonable to expect that such a national
system should be one that works appropriately and without significant problems,
such as those arising from the approach taken to award modernisation.
We consider that,
notwithstanding our desire to facilitate building on the reforms commenced by
the Howard Coalition Government in 2006, there is much to be said for ensuring
that the existing system gets it right before enveloping thousands of small businesses
which stand to be, in some sectors, adversely affected.
Conclusion
We reiterate our view
that Australia deserves a truly national system of workplace relations. It is
logical that a move to this end is necessary for a sophisticated economy such
as Australia and to this end Coalition senators support the outcome this Bill
seeks to achieve.
We do, however, remain
gravely concerned that, in moving towards a national system, the power and role
of the Commonwealth Parliament may be undermined by the States as provided in
both this Bill and the associated IGA. We are concerned that the Bill as
drafted introduces new complexities and uncertainties, provides scope for a
future “chequerboard” application of the Commonwealth laws and allows the
workplace relations system to become a political tool rather than an essential
element in balancing workplace fairness, strong economic conditions and the
promotion of jobs and job growth.
Additionally, there is
a potential for the workplaces in small businesses to be adversely affected if
they become subject to the Commonwealth laws. We should be careful to ensure
that the Commonwealth laws deliver appropriate outcomes and there are valid
reasons why this should occur prior to the States handing over their existing powers.
Senator Gary Humphries
Deputy Chair
Senator
Michaelia Cash
Senator Mary Jo Fisher
Qualification
– Senator Michaelia Cash – Western Australia
The
states have the constitutional power to determine whether or not they refer any
of their state based industrial relations powers to the Commonwealth. Some
states have made or intend to make such a referral.
Whilst
not challenging the constitutional right of those states who have made a
decision to refer their powers, as a Senator for Western Australia, I support
the previously stated decision of the Western Australian Government not to
refer its state based industrial relations powers to the Commonwealth but
rather “to work co-operatively with the Commonwealth to build a harmonised industrial
relations system without handing over Western Australia’s long-held,
constitutionally established role and powers.”
Navigation: Previous Page | Contents | Next Page